Lana Oconnell
Student loan debt can be a heavy burden, and many borrowers seek help with repayment plans, consolidation, or even loan forgiveness. While there are legitimate sources of free help for student loan borrowers, some for-profit companies offer assistance for a fee. This paragraph will explore whether paying for student loan help is necessary and outline some alternatives.
Should you pay to get help with student loans?
| Characteristics | Values |
|---|---|
| Free help | You can get free help with your student loans from your servicer or at studentaid.gov. |
| IDR plans | IDR plans base your monthly payment on your income and family size. You may qualify for forgiveness of the remaining balance of your Direct Loans if you work full time for a government or not-for-profit organization. |
| PSLF | Public Service Loan Forgiveness is available for those who make payments on an IDR plan while working full-time for a qualifying public service employer over 10 years. |
| Debt cancellation/forgiveness programs | You may qualify for debt cancellation or forgiveness programs such as borrower defense to repayment if your school defrauded you, closed school discharge, or total and permanent disability discharge if you're unable to work due to a disability. |
| Loan forgiveness for teachers | Teachers may be eligible for loan forgiveness of up to $17,500 if they teach full time for five complete and consecutive academic years in certain elementary or secondary schools or educational service agencies that serve low-income students. |
| Paid help | You may pay for personalized help with your student loans, such as credit counselors or legal advice. However, be aware of for-profit debt-relief companies that may charge for services you can do yourself for free. |
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What You'll Learn
Free government help
The US government offers free help to students with their federal loans. The Federal Student Aid website provides information on how to repay student loans and avoid offset and garnishment. The website also offers guidance on loan forgiveness programs, including the Public Service Loan Forgiveness (PSLF) Program. PSLF forgives the remaining balance on Direct Loans after 120 monthly payments under a qualifying repayment plan while working for the government or a nonprofit employer. Military service members with federal student loans can benefit from interest rate caps and loan repayment programs through the Servicemembers Civil Relief Act.
Additionally, the New York State Department of Financial Services offers free resources on student loan counseling and debt relief, including information on income-based repayment plans and loan consolidation. The state-funded Education Debt Consumer Assistance Program (EDCAP) in New York provides free, one-on-one counseling to help borrowers navigate the student loan system.
The US Department of Education's StudentAid.gov website allows borrowers to access their federal loan information, including servicer contact info, loan types, interest rates, and balances. This can help borrowers understand their repayment options and work towards loan forgiveness or income-driven repayment plans.
It is important to note that borrowers should never have to pay for assistance with their student loans, as the federal government provides free access to borrower assistance programs and income-based repayment plans.
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Loan forgiveness
You should never have to pay for help with your student loans. There are various government programs that can help you with loan forgiveness. One option is an IDR (Income-Driven Repayment) plan, which bases your monthly payment on your income and family size. If you make payments under an IDR plan for 20-25 years, the remaining balance on your student loans may be forgiven.
Another option is the PSLF (Public Service Loan Forgiveness) program. Under this program, if you work full-time for a government or not-for-profit organization and make 120 qualifying monthly payments under a qualifying repayment plan, you may be eligible for forgiveness of the entire remaining balance of your Direct Loans.
There are also specific loan forgiveness programs for teachers. For example, if you teach full time for five consecutive academic years in certain elementary or secondary schools serving low-income students, you may be eligible for forgiveness of up to $17,500 of your student loans.
Additionally, if you have a disability that severely limits your ability to work, you may qualify for a TPD (Total and Permanent Disability) discharge, which would result in the full discharge of your federal student loans.
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Debt cancellation
There are several programs that can help with student loan debt cancellation or forgiveness, depending on your situation. These programs are offered by the government and specify the requirements you must meet to qualify. If you are eligible, the Department of Education may cancel your loans, wiping out the debt and, in some cases, refunding any payments you have already made.
You should never have to pay for help with your student loans. There are many free resources available to help you understand your options. For example, if you have a disability that severely limits your ability to work, you may qualify for a TPD discharge, meaning you won't have to repay your federal student loans. Similarly, if your school closes while you are enrolled or soon after you withdraw, you may be eligible for a discharge of your federal student loan.
Additionally, if you work full-time for a government or not-for-profit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans. You may also be eligible for forgiveness of up to $17,500 if you teach full time for five complete and consecutive academic years in certain elementary or secondary schools or educational service agencies that serve low-income families.
Another option is an IDR (Income-Driven Repayment) plan, which bases your monthly payment on your income and family size. If you repay your loans under an IDR plan, your student loan balance may be forgiven after a certain number of payments over 20 or 25 years.
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Credit counselling
For example, NFCC-Certified Credit Counsellors offer professional support and a full review of your finances and student loan payment options. They can help you discover the best repayment plan based on your financial needs and provide tips for improving your finances and credit beyond student loans.
MMI, an A+-rated member of the Financial Counseling Association of America (FCAA), also offers student loan debt management counselling. They provide a complete online analysis of your student loans, including plan recommendations and a DIY action plan, for free. If you need additional support with document preparation and submission, it is available for a fee, and you can also access full one-on-one counselling with a live student loan expert for a fee.
It's important to note that you should never have to pay for help with your student loans from the government. The Federal Student Aid website provides information on student loan forgiveness and other ways the government can assist with loan repayment. This includes IDR plans that base your monthly payment on income and family size, as well as loan discharge options for certain circumstances, such as disability or school closure.
In summary, credit counselling can be a valuable resource if you're feeling overwhelmed by student loan debt. Certified credit counsellors can provide personalized guidance and support to help you manage your student loans and improve your overall financial situation.
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Legal advice
While you can get free assistance with your student loans from your servicer or at studentaid.gov, you may want to seek legal advice if your situation is complex. Credit counselors and legal advice generally cost money, but they may be worth it if your situation is complicated and the provider is reputable.
Legitimate student loan help organizations will not contact you via phone, text, or email with offers of debt resolution. Avoid "debt relief" companies that promise immediate loan forgiveness, as this is too good to be true. You can also apply for loan forgiveness or discharge through federal student loan programs. For example, if you have a total and permanent disability, you may qualify for a TPD discharge, meaning you won't have to repay your federal student loans. Similarly, if your school closed while you were enrolled or soon after, you may be eligible for a closed school discharge.
If you are dissatisfied with the help you've received from your lender or servicer, you can make a complaint by contacting the highest office of customer service, such as a consumer advocate, ombudsman, or claims department. Federal loan borrowers can submit complaints through the Federal Student Aid Feedback System. Remember, you should never have to pay for help with your student loans, and there are free resources and complaint procedures available to you.
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Frequently asked questions
No, you never have to pay for help with your student loans. Most student loan borrowers can get the assistance they need for free from servicers or at studentaid.gov.
You can apply for free for debt cancellation or forgiveness programs such as Public Service Loan Forgiveness, which is for those who have made payments on an income-driven repayment plan while working full-time for a qualifying public service employer for over 10 years. You can also apply for a Total and Permanent Disability discharge if you have a disability that severely limits your ability to work now and in the future.
You may want to pay for personalized help with your student loans if your situation is complex and the provider is reputable. Credit counselors and legal advice generally cost money.
Avoid "debt relief" companies that promise immediate student loan forgiveness. You can enroll in income-driven repayment plans yourself for free, so be wary of companies that charge a fee for this service. Some may take your money without fulfilling their promises.
